Brand Failures_ The Truth About the 100 Biggest Branding Mistakes of All Time - Matt Haig [113]
However, despite its continued ubiquity the Levi’s brand has had a rocky ride in recent times, having watched sales slip from US $7.9 billion in 1996 to US $4.3 billion in 2001 and then a further dip to $4.1 billion in 2009.
As with most brand crises, the problems for Levi’s have been numerous. To understand them fully, it is necessary to appreciate the company’s branding strategy. Levi’s CEO Robert Haas told The Financial Times in 1998 (ironically one of the most uncomfortable of years for the brand):
We are in the comfort business. I don’t just mean physical comfort. I mean we are providing psychological comfort – the feeling of security that, when you enter a room of strangers or even work colleagues, you are attired within the brand of acceptability. Although what a consumer defines as psychological comfort may vary from sub-segment to sub-segment.
The key phrase here is that last one, ‘from sub-segment to sub-segment’. In its attempts to be sensitive to the various fluctuations of taste among the denim-wearing public, Levi’s has diversified its brand by creating a wide range of jean styles. Most significantly, it has branched out beyond its traditional ‘red label’ jeans and introduced a new sub-brand called ‘Silvertab’. The company has also produced a cheaper range of jeans with orange tags.
Furthermore, the advertising campaign used to promote the Silvertab range in 2001 was among the most hated in recent history. Ad Age called the campaign ‘insulting’ and claimed it ‘lacked branding’. Similarly, in 2002 the ads to promote Levi’s low-rise jeans achieved an equally negative reception among certain critics.
However, not all the problems have been of Levi’s making. For instance, it could do little to curb the rise of designer jeans such as those produced by Calvin Klein, Diesel and Tommy Hilfiger. All Levi’s could do in the face of such a competition was to try to preserve the integrity of its brand. Even here, the brand ran into difficulty.
In the UK, the start of the new millennium saw Levi’s become engaged in a very public battle with Tesco’s supermarket. Tesco’s claimed that consumers were paying too much for their Levi’s and the supermarket wanted to sell Levi’s in its own stores with a narrower profit margin. Levi’s refused to sell its premium jeans, such as 501s, via the supermarket, and went to court to stop imports from outside Europe.
‘Our brand is our most important asset,’ explained Joe Middleton, Levi’s European president. ‘It’s more valuable than all the other assets on our balance sheet. It’s more valuable than our factories, our buildings, our warehouses and our inventory. We must have the right to control the destiny of that brand.’
Even the UK government joined in, attempting to persuade the European Union to allow supermarkets like Tesco’s to import goods from anywhere in the world. However, Levi’s insisted that Tesco’s was missing the point, confusing the cost of making the jeans with the cost of marketing them. ‘The important point,’ said Middleton, ‘is that all these costs are an investment in the brand. The true cost of making this jean is not just the factory element. It’s much more than that.’ The UK government, keen to eradicate the image of ‘Rip-off Britain’ has remained on the supermarket’s side, and it looks like Levi’s will eventually lose the battle.
Despite all these unfortunate external factors, there is no escaping the fact that the real threat to the Levi’s brand is generated from Levi’s itself. Now that it is locked in an endless quest to appear ‘innovative’ and ‘youthful’, by launching a growing number of new styles, Levi’s is now proving the law of diminishing returns. The marketing expense continues to grow, while the true brand value diminishes.
The view within the business world has been articulated by Kurt Barnard, publisher of Barnard’s Retail Trend Report, in The Financial Times in 2001.